member interview: ‘we have to keep on our toes’, Yanki Tshering, BCNA

Could you tell us a little bit about yourself and why you set up BCNA?

I’ve always been inspired by people who start their own businesses. I grew up in a Tibetan refugee community in India , and in the markets there you’re surrounded by all these small businesses and people creating their own jobs. It’s pretty amazing. I was very fortunate myself; I came to the US as a refugee, received a graduate school scholarship from Columbia University and had a lot of opportunities which I want to pass on. More than anything, the entrepreneurial spirit of many of the immigrants and refugees that come to the US makes for a very exciting job – I’m sure there’s a reason you are doing research on refugee entrepreneurship!

What is BCNA’s programme model for providing refugees and migrants with access to finance?

The Business Center for New Americans (BCNA) is a Community Development Financial Institution (CDFI), and is certified by two federal agencies. In terms of access to capital, we are certified by the Small Business Administration (SBA) as a micro-lender, which means we can borrow from them and relend at a very low cost. We also get funds from the CDFI Fund to relend. This is a risk we take, albeit a necessary one – a famous entrepreneur (Jim Koch of the Boston Beer Company) in the US said the greatest risk in life is not taking a risk!

We originally provided loans from $500 to $50,000, but in 2018 we were certified by the SBA to offer loans up to $250,000 which are guaranteed up to 85%. It’s actually easier for banks and other financial institutions provide these larger loans, because they’re easier to underwrite – the recipients tend to be larger businesses with accountants and a solid credit history. In fact, as the CDFIs have become more mature, they tend to steer away from offering smaller micro-loans.

Nevertheless we feel it’s very important to stay true to our mission of ensuring refugees, immigrants and other vulnerable groups have access to finance. Last year we provided 338 loans totalling $4.3 million – of those, over 250 were small loans from about $500 to $5,000. It is difficult – there is lots of paperwork, and we often need to explain things to clients in their own language. One thing we’re proud of is that we’re able to provide services in 14 languages and dialects.

Many refugees and immigrants struggle to access finance due to poor credit history. How do you address this issue?

There is a programme that can match the savings of refugees – up to $2,000 per individual and $4,000 for a family. It’s really useful for refugee clients who have a very low income. With smaller loans, we consider them to be ‘character’ loans. But when clients start to grow their business and they come in for a larger loans, we do expect them to be responsible.

We also have credit counselling for refugees with low credit scores. There is resistance to coming in for classes because people are busy – they have families and often two or three jobs. However once they come, they’re really amazed because for many of them, such a thing doesn’t exist in their country. We teach them why it’s important to have a good credit score because it’s going to impact them not only for their business, but also if they want to rent a house or buy a car. In addition to the loan workshops we have group training, one-on-one counselling and even an app! Most of our clients, even if they have numeracy or literacy challenges, love their smartphones – it’s what they use to communicate with people back home.

So although it can be difficult to convince clients to come in, once they do the loan officers have their full attention. They explain why having a good credit score is important in a way that’s warm and friendly. They help them download the app, which is developed by Capital One Bank, that lets them immediately if there’s something on their score that they need to be aware of.

A classic example is a refugee who found he had $60,000 debt on his credit score, but it was a mistake. After he first arrived, he was staying in an apartment with seven or eight other people while he waited for his family. There was someone with the same name (and of course same address) at the apartment – the debt coming up on our client’s score didn’t belong to him, but instead to this other individual.

We now belong to an organisation called Credit Builders Alliance (CBA). Previously our loan officers had to deal with the credit bureaus to clear up these issues, but it’s difficult because they don’t care about small organisations like BCNA and its clients; they deal with lots of huge businesses which take priority. However, now we can inform CBA and they have dedicated staff who have relationships with credit bureaus’ and are more often than not familiar with any credit related problems.

What kind of businesses do your clients set up using the loans?

We have many street vendors. For example, every Valentine’s Day one client borrows $500 to buy roses and sell them on the street. Others sell umbrellas when it rains – that’s very common in New York. Others, like African female refugees, rent a chair in a hair salon for hair braiding. One has 12 people working for her – she was able to use Instagram very effectively, to show pictures of different hair styles. They were so beautiful that she would actually get clients coming from other States to get their hair done for special occasions. Others have gone on to open stores – one client owns four groceries stores and he’s doing very well.

How do you recruit into your financial assistance programmes?

In terms of recruitment, it’s something we feel we need to do better. We recruit a lot of clients through word of mouth, which is great. However at one point most of our refugee clients were from Liberia, simply because we had a Liberian loan officer! We have to put certain things in place to make sure it’s inclusive, and that’s when we opened up discussions with the IRC who were resettling refugees in New Jersey.

In order to serve clients there, we had to get permission from the Office of Refugee Resettlement because they had originally given us a grant for only New York. We told them it was an exciting opportunity, because the refugees from the Middle East and Venezuela in New Jersey are so entrepreneurial. It’s also good for us if we have successful clients, so that’s why this kind of outreach is so important. We have to keep on our toes; if we simply sat at our desks we’d meet our targets but we want to do better than that.

Last year we served clients from 55 countries – immigrant clients included in this count.

How do you think the experience of immigrant and refugee entrepreneurs differs between the US and European countries, like Germany?

In a country like Germany, there is a very strong safety net to provide citizens with their basic needs. Unfortunately we have less of that in the US. However one thing that’s great about this country is the great understanding and support of providing capital for businesses. What we have here, and I think it’s very healthy, is to have competition. This can be very inclusive – what I found with our refugee and immigrant clients is that once they qualify for a loan they feel included and part of the financial system. It’s very empowering for them to feel they qualify for a credit card and eventually a mortgage to buy their first home; they’re proud of having the option.

Back home, entrepreneurship is simply a need. I grew up in India, and there you just took a big sheet, spread it out on the side of the road and started selling peanuts, roasted potatoes, or whatever it was. For people with that mentality it can be difficult when they go to Europe, despite the strong social safety net, as it’s much stricter in terms of setting up a business. In that sense I think the US is a better destination for refugees, although this makes it all the more disappointing that the number of people granted asylum here is falling every year.

Earlier you mentioned cultural diversity. Why is this an important reason for supporting refugee and migrant entrepreneurship?

For me it’s the most exciting thing about these businesses. When I go to a conference, I take some items from our clients so they can be auctioned off – there’s lots of excitement over the fabrics, necklaces and especially the food. While I’m very optimistic, I’m very fearful that we are going to end up with maybe five big businesses in the whole world. Not having those regular mom and pop businesses and the feeling you can just go out and start a business is going to affect cultural diversity. Everything we eat in New York comes from migrants – culture isn’t just going to the opera.

There’s a social entrepreneur in New York who started a business where refugee chefs prepare the food. We always order from them when we have events – it’s called Eat Offbeat. Now I like a good pizza or hamburger, but these people are truly adding to the culture and colour of the city.

As a CDFI we belong to two trade associations, and I hope they will continue to and increase focus on showcasing how refugee and immigrant entrepreneurs contribute to diversity and innovation.

What role can the trade associations that refugee and migrant businesses belong to themselves play in supporting ethnic entrepreneurship?

It’s a little bit like the Catholic Church. When they saw most of their members came from the Hispanic community, they started advocating for immigration reform and actually sheltering some of these immigrants. Similarly if trade associations see who their members are and that their existence is challenges, they can realize the value of immigrants and refugees

Some, like the restaurant association, are very aware that immigrant workers are important for the industry and that there’s a need for delicious ethnic food. However often they only think of the bigger businesses, but don’t care about the street vendors – or even consider them to be taking away business.

What are some of the key challenges you and your organisation face?

It’s difficult when it comes to clients with numeracy and literacy challenges because everything has to be explained to them in an appropriate way. We have worked with people who face those challenges that have been able to set up a relatively successful business, but it’s because of sheer entrepreneurial spirit.

The BCNA tries to support refugees not just in achieving self-sufficiency but also wealth creation. We want them to do more than just cover their bills; they need to be able to save, send their kids to college just like anyone else.

Do you have any final comments for the Refugee Entrepreneurship Network?

I want to say the United States has a very mature system in terms of supporting refugee entrepreneurs; in our network here there are 21 members and we receive support from the Office of Refugee Resettlement. However we all need to do our bit to highlight that refugees are not just benefiting from the welfare and generosity of the host country, and that they’re contributing in many different ways.